This week’s Side Gig Thursdays is a chat with Michael Wong, who started a side business where he ran vending machines. If you’ve ever wondered who runs that vending machine in your office, chances are it’s either a big vending machine company or it’s someone like Michael. He started doing it on the side while working at a network engineer and has sales of several hundred dollars a month – enough to keep him interested!

If you’ve ever been curious about how these types of business work, as simple as they may sound, Michael shares some of his experiences.What is your day job?
Network Engineer for a financial services company

Where do you put the machines? Do you pay the locations a flat fee or a % of sales?
I have them in small offices. I don’t pay fees.

Once I hired a locating firm, they were based in Illinois. I got stiffed. They wanted $300 per location, 50% upfront. I paid for 4 machines but they never delivered. They told me that I had to pay from 20% to 50% of sales, it was outrageous. They also wanted to charge me $100 to move the machines to the locations. Other locators have the same arrangements, but from my experience I will never hire them.

Is it typical for vending machine owners not to pay a fee?
It is typical for small offices. Stores and retail businesses typically charge a fee.

In big buildings, county or state offices, schools, colleges, typically there is a concession contract that requires a yearly payment to the county/state.

How did you start doing your side business?
I had read the book ‘Rich Dad Poor Dad’ by Robert Kiyosaki, he suggested to start a business to start on the way to financial independence. Then went to a free seminar pitching vending machines. I didn’t buy from them but I did some research and bought from another company. Then setup my company as a sole proprietorship and retained an accountant.

Do you own the machines or lease them?
Own.

Do you stock them?
Yes.

How do you know what to stock them with?
I ask the customers what they would like. I provide them with a list to choose from.

How many hours a month do you spend on it?
About 16 hours per month.

Was there anything that surprised you about the business now that you’ve been doing it for a while?
It wasn’t as productive as I thought it would. It takes more work than I thought it would take.

Do you have a plan to try to turn it into your full time gig?
No. It doesn’t pay well enough.

What resources did you rely on in starting the business?
I also bought a book, something like “Idiot’s guide to starting a business.” I looked at business articles on Wall Street Journal and other internet resources.

Do you have any advice for people looking to start something on the side?
There is a lot to think about: legal, liabilities, taxes, marketing, sales, post-sale service, purchasing, accounting, financials, funding, vendors. Even how to get out if it doesn’t work out. There should be no conflict of interest with the day job for ethical reasons. Keep track of metrics to determine if the business is making money or losing money. And adjust operations accordingly if possible.

Mind expanding on the last bit – the “lots of think about” and what someone might do to mitigate all those risks?
I would say, besides researching, perhaps finding people that do the same thing and pick their brains.

I hope you enjoyed the interview and if you know someone who would like to talk about their side gig, let us know!

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In my opinion, today is a great environment to create a side gig with Rental Real Estate.

I started in 2007 with 1 building, and now have 6 of them. It is the BEST thing I did, and for me it has become second nature to take care of things with tenants.

I spend approx 4 hours a week and self-manage all of these apartments.

I do not life a hammer and have only used a screw-driver once.

Most of these properties needed a lot of work, and got all of it done with non-certified and non-licensed contractors to save on labor costs.

Properties are all in one area, and were bought from government (some of my own tax money was being frivolously abused and given away to the buyer by Govt) or from ridiculous sales.

Income is VERY decent in the 5 figures, and I am trying to get more buildings to hit the six figure mark by sometime in 2014. Bidding on properties is NOT helping win any new ones, but I am not chasing them either.

If you have NOT taken the risk to get into one, please do, and, yes it is work when you get to you first, but push yourself and do it since rental market is exploding, and demand for apartments has gone up 2x in just the 3-4 years that I have been doing this. My friend says it is a “Landlords Market”!

Back in the 90′s while I was in college, I watched an infomercial regarding vending machines and attended a seminar for Antares Corporation. Since I was gullible at that time, I paid a down payment of $5000 (using a credit card) that same day and had 90 days to comes up with the balance of $13K so that I could take delivery of these machines.

I never was able to come up with balance due and forfeited the deposit I put down. After that experience, I never attended any financial help seminar again. My credit was ruined and I became depressed.

Fast forward to the present, I am debt free, have a great job, have over $250K in my bank account and now laugh at all the things I tried as a youngster to make a buck in the pre-internet days.

Michael Wong did it the right way and I wish I had this knowledge back then.

In 1949 my dad and a friend had some vending machines that they rented and serviced. They held peanuts and I remember finding an open burlap bag of peanuts in Dad’s workshop. I still remember the scolding I got after I passed out handfuls to the neighborhood kids.

I recently did some research into candy sales for charity fundraising purposes. His rates may be different, but most everything I found was right around 50% (or slightly less) profit, and that doesn’t include added shipping costs.

Obviously, we don’t know the details, but I’d be willing to guess that actual profits from this (after buying the items, shipping, cost of his gas to drive to each machine, amortized cost of each machine, maintenance, paying the accountant, etc.) probably end up working out to be very close to minimum wage. But, even if that is all it pays, it’s nice to be able to work on your own schedule.

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